America’s most elite colleges serve as gateways to positions of wealth and power. The twelve most prestigious private schools (the Ivy League plus the University of Chicago, Stanford University, the Massachusetts Institute of Technology, and Duke University), represent just 0.8% of college students. However, graduates of the so-called “Ivy-Plus” universities make up 13% of the highest earners and 12% of Fortune 500 CEOs. Ivy-Plus alumni are also overrepresented among prestige positions such as U.S. Senators and New York Times
It is concerning, then, that students who grow up in wealthy families are more likely to attend Ivy-Plus schools, even after taking academic qualifications into account. Among middle-class high school students who score at the 99th percentile on the SAT or ACT, roughly 10% attend an Ivy-Plus university. But among ultrarich students with identical test scores, nearly half attend one of the twelve most elite schools.
New research by economists Raj Chetty, David Deming, and John Friedman leverages several novel datasets to investigate why. The authors find that students with wealthy parents enjoy a large advantage in elite college admissions that academic credentials alone cannot explain. Moreover, graduates of these institutions reap significant monetary and nonmonetary rewards compared to similar college graduates who attended less-prestigious schools.
The findings suggest that elite college admissions would be fairer if admissions officers relied more—not less—on academic factors such as SAT scores. But the study should also be a wake-up call for employers to give less weight to the name-brand of a university and more to the qualities of individual students when hiring.
Why rich kids get into Harvard
Income-based differences in the rates at which students attend elite schools can be decomposed into three stages of the college-enrollment process: submitting an application, receiving an offer of admission, and actually matriculating after receiving that offer.
The authors find that, after accounting for standardized test scores, high-income students are slightly more likely to apply to Ivy-Plus colleges. Differences in application rates explain roughly 22% of the income-based gaps in attendance rates.
By contrast, most of the gap is explained by admissions rates: high-income students who apply are more likely to receive an acceptance letter to Ivy-Plus colleges. Preferences for recruited athletes explain roughly 16% of the gap. Another 20% of the gap is down to the fact that admissions officers assign wealthier students higher ratings on nonacademic dimensions, such as extracurricular activities. (It’s generally easier for rich students to afford sailing lessons.)
But the largest single factor driving wealthy students’ advantage in elite college admissions is the preference for legacy applicants—the children of alumni. Holding other applicant characteristics constant, students whose parents attended the college are three times as likely to receive an acceptance letter as non-legacy applicants.
Legacy admissions may be a tool to secure donations from well-heeled alumni. A middle-class applicant to an elite college improves her chances of admission roughly threefold if she is a legacy. But legacy applicants at the top of the income distribution are five times as likely to get in. Legacy preferences explain 30% of the gap in elite-college attendance rates by income.
The remainder of the gap is down to matriculation rates: wealthier applicants, once accepted to an elite college, are slightly more likely to enroll—but only slightly. The authors figure this is mostly due to richer students’ use of early decision, which obliges admitted students to attend. Matriculation rates explain just 12% of the class-based gaps in elite college admissions. These facts suggest, in the authors’ view, that “financial barriers are not the key driver of differences in attendance rates at Ivy-Plus colleges by parental income.”
Elite colleges unlock elite jobs
The authors next investigate how attending an elite college enables students to secure high-earning and prestigious jobs. Directly comparing the job outcomes of students who attend elite colleges to other students would not isolate the impact of elite colleges, as the students who get into those schools are different along other dimensions, such as family wealth.
Instead, the authors pursue more sophisticated methods, such as comparing students who were narrowly admitted to an elite college to similar students who were narrowly rejected. For students who attend an Ivy-Plus school, the authors both observe their later-life outcomes and construct counterfactual life outcomes had they instead attended a selective state flagship university. This allows the authors to isolate the impact of an Ivy-Plus college versus the next-best alternative.
Somewhat counterintuitively, the authors find that the impact of attending an Ivy-Plus college is small for the typical student. The average graduate of an Ivy-Plus institution ends up in the 79th percentile of income as an adult. In the counterfactual scenario where that typical student instead attends a selective state flagship university, she ends up in the 77th percentile of income instead.
But Ivy-Plus colleges have a much stronger impact on students’ chances of ending up in the very top echelons of society. Students who attend one of the elite universities are 44% more likely to reach the top 1% of the income distribution. While the impact of an Ivy-Plus school is modest at the average, it is substantial at the tail end of student outcomes.
There are nonmonetary rewards as well. Students who attend an Ivy-Plus university roughly double their chances of attending an elite graduate school. Ivy-Plus graduates are also 173% more likely to work at a “prestigious” firm, defined as an institution that is attractive to graduates of elite colleges but pays below-average salaries. There’s a reason so many New York Times journalists have Ivy-League degrees.
Breaking the Ivy League cartel
Ivy-Plus colleges give significant preferences to wealthier applicants, even after accounting for differences in academic preparation. Graduates of elite schools go on to overrepresentation in the top 1% of the income distribution, as well as coveted prestige jobs and positions of leadership. While defenders of higher education like to cast universities as engines of economic mobility, Ivy-Plus schools are, if anything, a hindrance. What is to be done?
College admissions should rely more on standardized tests. Critics argue that the SAT and ACT give an advantage to wealthier students who can afford test-prep courses. But the Chetty research demonstrates conclusively that rich students retain a leg up in college admissions even after accounting for standardized test scores, because they have an advantage in nonacademic qualities such as athlete and legacy status.
It follows that more emphasis on standardized tests and less on nonacademic factors would improve the socioeconomic diversity of entering classes. At the extreme, randomly selecting an entering class from all applicants with an SAT score above 1500 would result in more representation of low- and middle-income students on elite college campuses. But elite colleges are unlikely to do this, as giving up preferences for the children of rich alumni would hurt their bottom line. (Indeed, most schools are moving in the opposite direction.)
Expand the student body of elite schools. The number of students attending four-year colleges has doubled over the past forty years, but most elite colleges have not expanded their enrollment. Even if the factors considered in admissions remained the same, expanding enrollment would allow more low- and middle-income students a shot at high earnings, prestige careers, and leadership roles. There are more than enough qualified applicants to fill larger entering classes at Ivy-Plus schools.
But elite colleges are unlikely to expand enrollment if they believe, correctly, that much of their degrees’ value is tied up in their exclusivity. Perhaps the ability of elite schools to catapult graduates into the top 1% is mostly down to branding. Elite employers pay top dollar to snap up job candidates with degrees from Harvard or Yale because they know those degrees are in short supply. If selective colleges became slightly less selective, it might shatter the illusion that Ivy-Plus degrees have any real value-add beyond that of a large state university.
Give up their irrational preferences for elite schools. Ivy League admissions committees are unlikely to change their behavior. But the rest of us don’t have to play along. When scanning a resume, employers could simply skip over the name of the school and look at the job applicant’s other qualifications instead. The New York Times should give as much consideration to graduates of the University of Kansas as it gives to alumni of the Ivy League.
The fact that Ivy-Plus admissions rely so heavily on nonacademic factors such as parental wealth and legacy status should demonstrate that an Ivy-Plus degree is not the reliable indicator of academic excellence that most people believe it to be. Employers might as well drop the name-brand preferences and hire based on job applicants’ skills and experience. That will give graduates of all schools—not just those serving the wealthy—a shot at great careers.
Elite colleges serve the elite and it will be difficult to make them change. But the rest of us can deny them their status as gatekeepers to positions of wealth and power. That is the most promising route to making higher education fairer.
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